ERISA1

Thanks Peter. Fortunately, this Sponsor did not have investments with Couture. Couture has not been banned from the TPA business. His website is still up and running (though email is not). I would expect his TPA work could be bad, but some records, especially plan documents and census records, are better than nothing.

The shut down must have happened in 2020, because the 2019 work was completed. CWM even prepared a restatement effective 1/1/21, so they were probably in business until the 2nd half of 2020. I think many clients were waiting for CWM to complete 2020. The owner was in the investment business. He must have had employees performing TPA work. Perhaps if we keep on posting this query will become more prominently featured for all of its activity. I am just getting started with the search for CWM's files. I can start posting on other social media. I just know that BenefitsLink is the best place to get started.

Thank you. I saw the article too. Shocking! I figured there ought to have been other clients and advisors who would have found replacement TPA's 2 years ago, when the arrest first happened, and that one of those TPA's is a subscriber to these Boards. I appreciate your response very much!

Hi - We are trying to provide TPA services to a plan that had, until 2019, been serviced by a TPA called CWM Retirement Plan Services, LLC, in Massachusetts. They have not responded to our communications in any form. I now understand that they were shut down quite suddenly and dramatically. It seems clear the owner is not available to provide any information. Is anyone aware of how we might be able to obtain records that had been held by CWM Retirement Plan Services? For example, did another TPA take over their files? Any help or information will be much appreciated.

Hi - I am speaking with someone who is hurting from having been taxed on a deemed distribution due to failure to an an installment by the end of the cure period. I don't think it can be corrected because payment was made after the cure period. However, I think I can offer him some consolation by suggesting he repay the loan and make a Roth Conversion of the repaid balance. There won't be tax on the conversion because he has "basis" in the funds (i.e., the money has already been taxed). I am concerned however about whether there is a restriction against converting this type of after-tax money. I can't think of a reason, but I am paranoid. (After all, I work in the pension industry.) The literature only speaks of tax-free conversion of 'after-tax contributions'. Repaid deemed loans are after tax, but they have a kind of moral taint for failure to repay a loan. Does anyone think that this type of after-tax money cannot be converted to Roth? Assume that payment was restored to original sources (e.g., Profit Sharing, Pre Tax Elective Deferrals, Rollover account), and assume the plan allows conversion of vested funds held in any account. Any problems? Thanks

I just heard from FT William. They say I should draft the restatement exactly as Belgarath suggests above. Thanks Belgarath.

Thanks! I am trying not to load up the document with a lot of piecemeal effective dates. You mention 1/1/22 as the main effective date. Do you think that date is critical in any way? Ultimately, I can satisfy the client's communication objective by drafting the Summary Plan Description to say it reflects the design as of 8/1/22. Still, I dislike having to specify a bunch of interim effective dates, especially because my (FT William) document does not specify specific effective dates for the many provisions that must take effect before 1/1/22 (or 8/1/22). (Perhaps you can tell that I am fishing for someone to tell me than an 8/1/22 effective date is OK.) Thanks

I have a client that wants to introduce significant design changes effective August 1, 2022. This is one day after the deadline to "adopt" Cycle 3 (Post PPA) restatements. If the document is signed prior to 8/1/22, but effective one day after the adoption deadline, would you have any concern that the restatement is not timely? I think not, but I will appreciate your thoughts, and hopefully, citations. The question of Restatement effective dates comes up all the time. For example, most of us are drafting Cycle 3 restatements with effective dates that are later than the earliest effective date of changes made in the document. For example, a lot of documents are being drafted with 1/1/22 effective dates for laws that took effect in 2018 and earlier. Clearly, there is a deadline to sign the document on or before 7/31/22, but does anyone know of a requirement that documents specify earlier effective dates? It seems the only requirement is to sign before the end of the Remedial Amendment Period, on 7/31/22. Thank you very much.

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Might this be an Affiliated Service Group under IRC 414(m)(5)? I doubt the former employer or new consultant would want this outcome.but it could put a spin on all of the responses in this thread.

I have found that PPA documents don't include adequate provisions to clarify effective dates for specific laws or individual client designs. My sponsors document only says it is intended to to satisfy the requirements of the 2012 Cumulative List. Is anyone doing more than relying on general provisions in the document? Thanks

You could create a separate plan if it can pass coverage, However, cost will far exceed benefit if all they are trying to save is a match for an occasional NHCE.

ERISA Section 105 requires benefit statement to include a statement of "vested percentage of such benefits (or the earliest date on which benefits will become vested)". Do you agree that the "earliest date" is the date on which a participant becomes partial vested? That is, on a 2/20 vesting schedule, does a participant "become vested" when they become 20% vested or when they become 100% vested? Thanks

Thanks

On what line of Form 5500, Schedule H would you report the value of a private hedge fund? Investors are not partners, the fund is not a registered investment, it is not a trust. Would you report it as a joint venture? Thanks for sharing your thoughts and experience.

Hi - I am seeking practical feedback on the question of attribution of ownership to minor children. I don't question that IRC section 1563 attributes ownership from parents to children under 21. This creates controlled groups of entirely separate companies simply because they are owned by spouses with minor children. The thing I struggle with are the many cases where the issue goes unnoticed (or is even ignored). I have lost a couple of prospects because they refuse to believe that aggregation is mandatory. For those with existing plans, they often say their TPA never notified them (even in cases where they are confident the TPA is aware of the facts.) I am curious about others' experience. Do you find this rule is often overlooked? I've never heard of IRS making an issue of it. Have you?

I am pretty sure I know that the following is a prohibited cutback of a protected benefit under 411(d)(6). Do you agree? Plan allowed in-service distributions of vested profit sharing amounts at age 59.5. Sponsor wants to amend so as to require participants be 100% fully vested before they can take an in-service distribution. The sponsor cannot do this; agreed?

Hi - I am wondering whether the employees of entities owned by a fund; e.g., a Mutual Fund, must be aggregated with employees of the Fund's management company. It seems there should be an exemption but I am not aware of any. Facts: An investment fund (the "Fund") obtains its employees from a Management Firm. Ownership of the Fund and Management companies is not sufficient to make them a controlled group; however, they are likely an Affiliated Service Group. The management firm sponsors a qualified plan covering its own employees. The Fund owns 100% of several companies that offer retirement benefits with much lower contributions/benefits than those of the management org’s plan. Some of the companies owned by the Fund are held as passive investments only ("Passive" entities). Other companies are actively managed by a small group of employees of the management company ("Managed Entities"). Issues: 1. Must employees of the Passive entities be included in coverage/discrimination testing of the Management Org’s plan? 2. Same question as above with respect to employees of the Managed Entities. Proposed Answers: 1. The passive entities need not be counted in discrimination testing because: a. They are not part of a controlled group with the Management Company b. They do not render or receive services to/from the Management Company. 2. The managed entities need not be counted in discrimination test because: a. They are not part of a controlled group with the Management Company; and b. Whatever compensation they pay for service from employees of the Management Company will represent an insubstantial portion of gross revenues of the Management Company Additional Thoughts: I believe there are clear rulings in the area of Prohibited Transactions providing that passive investments are not treated as prohibited parties. I would think a similar exemption should apply to entities that are primarily owned as investments, even if they get some services from employees of the investment fund. Thanks very much for your feedback.

It works! Thank you very much.

Hi - I drafted a question in MS Word. I want to copy and paste the text into a new topic. I can't do it. This is so whether I right click and hit paste or if I use the icons above to Paste from Word or as plain text. Is there any way I can copy and paste, or must I retype the question? Thanks

I am curious whether anyone has an answer to this question yet. I acknowledge the underlying objective is to get around the rule prohibiting cross-testing of ESOP contributions. Many will say it fails the 'smell test'. This may be so, but I wonder whether it passes the general testing for non-discrimination.

It's been awhile since anyone has posted here; however, I want to follow up by asking whether you disagree with either of the following. I also have a follow up question: 1. The 404(a)(7) limit will cap the DC deduction to 6% of comp. (unless the plan is subject to PBGC). This really the same whether the plan as a SEP or PS; however, 2. A regular SEP (i.e., not a SAR-SEP) does not allow for elective deferrals. That means the SEP loses a $24,000 contribution opportunity (2015, born before 1966). I think that, in many cases, the loss of deferral opportunity will outweigh the savings from using a SEP-IRA. FOLLOW UP QUESTION: I am speaking with a prospect; not covered by PBGC. She has already funder $53,000 to her SEP this year. Do you agree that her total contribution for a SEP/DB combo will be limited to 31% of pay? Thanks .

Reflecting on all of the above I am now of the impression that, more likely than not, a QDRO can direct a plan to withhold tax on a payment to an Alternate Payee; particularly, when the Alternate Payee is a child. (I think the DOL 's opinion provides good support, and that IRS would likely give some deference to the DOL's position.) Acknowledging that there is always room for doubt, does anyone feel my impression is so wrong as to create concern of disqualification? Thanks everyone.

Thanks! Your point about rate of withholding is excellent! Our plan is to notify all parties about the issue; follow your concept of having the court specify the withholding rate; and let the parties fight it out. I think you are in agreement that the distribution will not be an "Eligible Rollover Distribution", and therefore, withholding will be subject to the 10% presumed rate; subject to a "right" to elect another rate.

Hi - We are about to receive a DRO directing our client's plan to pay child support to a state agency that (lawfully) represents the children of a Participant. We've never processed a QDRO for anyone other than former spouses. Can you please share your insights on the following: 1. Can the check be paid to a state agency? I think yes; it seems akin to paying to an IRA custodian. 2. Should the 1099 be issued to the Participant? I think yes, because child support payments are generally made with non-deductible income of the participant. Thank you very much.